Last season will go down as a record year for the dairy giant after the highest ever payout was combined with a record dividend of 57 cents per share. This topped the $9.30/kg payout of 2021/22.
Overall, a total $10.73/kg was paid to farmer shareholders for a record $16.2 billion in cash payments.
A full-year result released yesterday included $26b in revenue, up 15%, on just over 1500 million kilograms of milk solids collected over the period — up 2.6%.
The only let-down was its profit after tax of $1.1b was back 4% for the financial year ending July as a result of a higher tax expense.
Furthermore, the co-ops unchanged $10/kg midpoint forecast for this season, based on a $9/kg-$11/kg range, appears reachable.
Federated Farmers Dairy chairman Karl Dean said the past season had been a good result for Fonterra and dairy farmers.
“A strong milk price, strong dividend is, all in all, very positive for New Zealand’s dairy farmers and the economy. It is indeed a record payout and this year is still looking very strong at the moment with no change in the forecast milk price for the 2025/26 season which is always a good thing to see.”
He said farmers faced a waiting game as rising global milk production normally followed higher milk prices to put pressure on payouts.
Chief executive Miles Hurrell said he was confident the co-op could reach a $10/kg milk price based on its contract position a quarter of the way through the season.
There was uncertainty in the international market, but he was not concerned at this stage by extra milk appearing overseas as demand remained strong.
“While we have seen the market come back from where it was maybe from a couple of months ago from its peak, we had built that into our pricing from the start so we are still very comfortable with $10. Despite additional milk coming out of North America in particular we are still seeing strong demand and we just have to watch some of those geo-politics in play.”
Most of the extra North American milk would be consumed in their domestic markets, he said.
Mr Dean said farmers appreciated a strong dividend being delivered with a high payout when milk was costlier.
Mr Hurrell said 2024/25 had been one of the co-op’s strongest results for shareholder returns.
He said Fonterra had taken important steps towards growing value for farmers by focusing on being a dairy nutrition provider.
This had resulted in an agreement to sell its Mainland consumer business to Frances Lactalis for $4.22b, subject to shareholder and regulatory approvals.
“We’re also positioning the co-op to deliver further value through our foodservice and ingredients businesses, including continuing to invest in new manufacturing capability to meet growing customer demand for our high-value products.”
Fonterra has mapped out growth plans to invest up to $1b over the next three to four years in projects.
A $75m advanced protein hub expansion at the Studholme site was expected to be completed early next year to cater for the fast-growing high-protein market for medical and sports nutrition.
Later that year a $150m Edendale expansion will see a new UHT cream plant providing additional processing for the foodservice business and more product options.
Other projects include growing the value of protein products and adding more value to milkfat through new butter and cream cheese investments.
Further investment is expected to be sunk into upgrading other sites with planning, data, AI and automation systems.
The co-op delivered a return on capital of 10.9%, in line with the target range of 10%-12%.
Chairman Peter McBride said Mr Hurrell’s pay packet rising to $6.11m was based on global benchmarking.
Mr Hurrell and the executive team’s outcomes are aligned to the outcomes of farmers and shareholders.
